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Subject: Telecommunications Act (HR 3515) H.R. 3515 -- Transcribed by James D. Bryant II on Nov. 24, 1991 I have proofed this twice, it should not contain any errors or omissions, I can't access my spell checker right now, there may be a typo or two somewhere.. The following document is a full transcription of the Telecommunications Act of 1991. If this bill does not pass, the Regional Bell Operating Companies (RBOCs) will be able to force all other information services out of business. Please TELL your Congressman and Senators, and all members of the involved committees to vote YES on this bill. The RBOCs have been conducting a massive disinformation campaign on the radio bashing the sponsers of this bill and saying that if this bill passes, that the public will not be able to use online information services leaving the impression on the listener that they are the ONLY ones that can provide these services. This bill will also provide for open competition among phone companies at the local level. This is the second reason that the RBOCs oppose this bill. The following information is from the SW Bell brochure on the subject : "IT SOUNDS EXCITING The exciting news is that we already have the technology to put these services to work for us through the seven regional holding companies -- Ameritech, Bell Atlantic, BellSouth, NYNEX, Pacific Telesis Group, Southwestern Bell Corpora- tion, and U.S. West. Some larger businesses in urban areas already use a variety of information services. But, they are not an option for most small businesses and the general public. That's because making the services available to everyone depends on the regional holding companies...." Information services depend on cables and switching facilities owned and operated by the RBOCs. Having them in the industry is a massive conflict of interest. They want their monopoly back! ------------------------------------------------------------------------------ H.R. 3515 102nd Congress, 1st Session [Page 01 of 35] H.R. 3515 To amend the Communications Act of 1934 to encourage competition in the provision of electronic information services, to foster the continued diversity of information sources and services, to preserve the universal availability of basic telecommunications services, and for other purposes. -------------------------------------------------------------------------- IN THE HOUSE OF REPRESENTATIVES October 8, 1991 Mr. Cooper (for himself, Mr. Bliley, Mr. Synar, Mr. Schaefer, and Mr. Bryant) introduced the following bill, which was referred jointly to the Committees on Energy and Commerce and the Judiciary. -------------------------------------------------------------------------- A BILL To amend the Communications Act of 1934 to encourage competition in the provision of electronic information services, to foster the continued diversity of information sources and services, to preserve the universal availability of basic telecommunications services, and for other purposes. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE 4 This Act may be cited as the "Telecommunications 5 Act of 1991". H.R. 3515 102nd Congress, 1st Session [Page 02 of 35] 1 SECTION 2. FINDINGS AND PURPOSES 2 (a) Findings--The Congress finds that-- 3 (1) the national welfare will be enhanced by the 4 continued development of robust competition in the 5 provision of electronic information services and tele- 6 communications services; 7 (2) the widest possible availability of informa- 8 tion and telecommunications services requires an 9 open telecommunications infrastructure that incor- 10 porates market-driven advances in technology and 11 whose features and functions are available on a non- 12 discriminatory and unbundled basis; 13 (3) the availability of multiple and inter- 14 connected complementary telecommunications net- 15 works can enhance competition in the provision of 16 information and telecommunications services; 17 (4) the redundancy inherent in a pluralistic 18 telecommunications infrastructure offers protection 19 against network failures; 20 (5) the cost-effective deployment of advanced 21 public telecommunicatins networks, subject to ap- 22 propriate safeguards, can further the long-standing 23 goals of universal telephone service at affordable 24 rates; 25 (6) the provision of information services by di- 26 vested operating companies prior to the development of H.R. 3515 102nd Congress, 1st Session [Page 03 of 35] 1 an effectively competitive telecommunications infra- 2 structure would likely lead to higher rates for tele- 3 phone exchange service and jepordize the diversity 4 of information sources and services; and 5 (7) current regulatory policies must be revised 6 and supplemented to ensure the universal availability 7 of telephone exchange service at reasonable rates 8 and fair competition in delivery of telecommunicati- 9 cations and information services. 10 (b) PURPOSES--The purposes of this Act are to-- 11 (1) ensure the continued availability of afford- 12 able telecommunications and information services 13 that are essential to full participation in the nation's 14 economic, political, and social life; 15 (2) encourage the continued development of ad- 16 vanced, reliable telecommunications networks; 17 (3) ensure that the costs of such networks and 18 the services provided over them are allocated equi- 19 tably among users; and 20 (4) ensure that the provision of information 21 services by divested operating companies does not 22 jepordize the universal availability of telephone ex- 23 change service at reasonable rates or undermine 24 competition in the information services marketplace. H.R. 3515 102nd Congress, 1st Session [Page 04 of 35] 1 TITLE I -- INFRASTRUCTURE 2 DEVELOPMENT 3 Sec. 101. NETWORK STANDARDS 4 Title II of the Communications Act of 1934 is 5 amended by inserting after section 201 the following new 6 section: 7 "Sec. 201A. NETWORK STANDARDS. 8 "(a) SERVICE QUALITY -- 9 "(1) ADOPTION OF STANDARDS.-- A Federal- 10 State Joint Board shall be established under section 11 401(c) not later than 90 days after the enactment 12 of this subsection to impose and enforce network 13 quality standards upon the common carriers for the 14 purpose of ensuring the combined maintenance and 15 evolution of common carrier facilities and services. 16 Not later than 180 days after the date of enactment 17 of this subsection, the Joint Board shall initiate a 18 rulemaking proceeding to establish standards, to be 19 enforced by the Commission and the State Commis- 20 sions as to matters within their respective jurisdic- 21 tions, for measuring common carrier network qual- 22. ity. 23 "(2) REPORTS -- Each common carrier shall 24 submit to the Joint Board established pursuant to 25 paragraph (1) a quarterly data report, in a form re- H.R. 3515 102nd Congress, 1st Session [Page 05 of 35] 1 quired by the Joint Board, reguarding compliance 2 with the prescribed network quality standards. The 3 Joint Board may require periodic independant audits 4 of common carrier compliance with the network 5 quality standards. The Commission, upon the rec- 6 commendation of the Joint Board, shall establish en- 7 forcement penalties and procedures, including expe- 8 dited customer complaint mechanisms, to ensure 9 common carrier compliance with network quality 10 standards. 11 "(b) INTERCONNECTION -- 12 "(1) GENERALLY-- Each local exchange carrier 13 shall provide interconnection, on a reasonable and 14 nondiscriminatory basis, to common carriers and 15 other providers of telecommunications services and 16 information services who request it. An interconnect- 17 ing party may physically colocate the equipment nec- 18 essary for interconnection at the premises of a local 19 exchange carrier, except as provided under para- 20 graph (2). 21 "(2) VIRTUAL COLOCATION-- A local exchange 22 carrier that can demonstrate by clear and convincing 23 evidence in a particular case that the physical 24 colocation required under paragraph (1) is not pract- 25 ticable for technical reasons or because of space lim- H.R. 3515 102nd Congress, 1st Session [Page 06 of 35] 1 itations shall offer an interconnecting party virtual 2 colocation with it's premises. Virtual colocation shall 3 be economically and technically comparable to inter- 4 connection that is or would be obtained through 5 physical colocation of the interconnecting party's 6 equipment at the premises of the local exchange car- 7 ier. Nothing in this paragraph shall relieve a di- 8 vested operating company of it's obligations under 9 section 227(d)(12). 10 "(3) EXCEPTION FOR RURAL EXCHANGE CAR- 11 RIERS.-- Notwithstanding any other provision of this 12 subsection, a rural exchange carrier shall not be re- 13 quired to provide interconnection to another local ex- 14 change carrier. 15 "(4) REGUALTIONS-- Within 270 days after the 16 date of enactment of the Telecommunications Act of 17 1991, the Commission shall-- 18 "(A) adopt and make effective rules to en- 19 force the oblications imposed by this subsection; 20 and 21 "(B) initiate a rulemaking to require that 22 the interconnection offered by a local exchange 23 carrier pursuant to this subsection shall provide 24 for the portability of telephone numbers. 25 "(c) NETWORK ACCESS-- H.R. 3515 102nd Congress, 1st Session [Page 07 of 35] 1 "(1) REVISIONS TO ORDER-- The Commission 2 shall further revise the order of the Commission en- 3 titled 'Filing and Review of Open Network Archetec- 4 ture Plans' CC Docket 88-2, Phase I, released De- 5 cember 22, 1988, and subsequently revised, to re- 6 quire that-- 7 "(A) the plans for compliance with such 8 order offer unbundled features and functions; 9 "(B) such features and functions are made 10 available on a reasonably uniform basis by all 11 of the common carriers subject to such order, 12 and that such features and functions are acces- 13 sible throughout the service territory of each 14 such carrier; 15 "(C) such plans include a schedule for 16 timely offering of new features asnd functions; 17 and 18 "(D) common carriers subject to such 19 order not unreasonably discriminate between af- 20 filiated and unaffiliated providers of informa- 21 tion services in offering tariffed and non- 22 tariffed features, functions, and capabilities. 23 "(2) REVIEW OF ORDER AND PLANS-- At least 24 once every three years, the Commission shall-- H.R. 3515 102nd Congress, 1st Session [Page 08 of 35] 1 "(A) conduct a proceeding in which inter- 2 ested parties shall have an opportunity to com- 3 ment on whether the order described in para- 4 graph (1), as further revised, and the plans 5 filed pursuant to it have opened the networks of 6 the carriers subject to such order to reasonable 7 and non-discriminatory access by providers of 8 telecommunications services and information 9 services; and 10 "(B) not later than 180 days after receiv- 11 ing the reply comments filed in such proceed- 12 ing, revise such order as it deems necessary or 13 appropiate and require the common carriers 14 subject to such order to file new plans consist- 15 ent with such revisions, which new plans shall 16 also be subject to public comment and Commis- 17 sion review prior to their becoming effective. 18 "(d) PRIVACY-- Personally identifiable customer in- 19 formation obtained or collected by a local exchange carrier 20 in the course of providing telephone exchange service shall 21 be used only in connection with the provision of such serv- 22 ice, and shall not be made available to any affiliate of such 23 carrier or any other person except-- 24 "(1) as required by law; or H.R. 3515 102nd Congress, 1st Session [Page 09 of 35] 1 "(2) upon the affirmative request by the cus- 2 tomer to which such information relates. 3 "(e) TARIFFS-- 4 "(1) GENERALLY-- A local exchange carrier 5 shall prepare and file tariffs in accordance with this 6 Act with respect to the interconnection and network 7 access services required under this section. The costs 8 that a local exchange carrier incurs in providing 9 such services shall be borne solely by the users of 10 the features and functions comprising such services. 11 The Commission shall review such tariffs to ensure 12 that-- 13 "(A) the charges for such services are cost- 14 based; and 15 "(B) the terms and conditions contained in 16 such tariffs do not bundle together any sepa- 17 rable elements, features, or functions. 18 "(2) SUPPORTING INFORMATION-- A local ex- 19 change carrier shall submit supporting information 20 with it's tariffs for interconnection and network ac- 21 cess services that is sufficient to enable the Commis- 22 sion and the public to determine the relationship be- 23 tween the proposed charges and the cost of provid- 24 ing such services. The submission of such informa- 25 tion shall be pursuant to the rules adopted by the Com- H.R. 3515 102nd Congress, 1st Session [Page 10 of 35] 1 mission to ensure that similarly situated carriers 2 provide such information in an uniform fashion. 3 "(3) UNIVERSAL SERVICE ELEMENTS-- A local 4 exchange carrier may include in it's tariffs for inter- 5 connection services an element intended to recover 6 the amount necessary to preclude any substantial in- 7 creases in the rates for telephone exchange service 8 that would otherwise result from the offering of 9 interconnection services. Such element shall be im- 10 posed at a uniform rate on any person who pur- 11 chases such services, and shall also be included at 12 the same rate in such carrier's charges for services 13 offered by the carrier in competition with the serv- 14 ices offered by interconnecting parties. No later than 15 270 days after the date of enactment of the Tele- 16 communications Act of 1991, the Commission shall 17 adopt and make effective rules governing the cal- 18 culation of such element. Any amounts recovered by 19 the local exchange carrier through the imposition of 20 this additional element shall be used to defray the 21 costs of providing telephone exchange servicce. 22 "(f) RESALE-- The resale of telephone exchange 23 service (or the unbundled elements of such service) in conjunc- 24 tion with the the furnishing of an interstate telecommuni- 25 cations service or any information service shall not be pro- H.R. 3515 102nd Congress, 1st Session [Page 11 of 35] 1 hibited or subject to unreasonable conditions by the Com- 2 mission, any State, or any local exchange carrier. 3 "(g) COORDINATED PLANNING-- The Commission 4 shall adopt and make effective rules for the conduct of 5 coordinated network planning by common carriers, subject 6 to Commission supervision, to ensure (1) the effective and 7 efficient interconnection and interoperability of common 8 carrier networks, and (2) that the design of such networks 9 does not impede access to information services by sub- 10 scribers to telephone exchange service furnished by a rural 11 exchange carrier. 12 "(h) STUDY-- No later than 270 days after the en- 13 actment of the Telecommunications Act of 1991, the Com- 14 mission shall initiate an inquiry to examine the effects of 15 competition in the provision of telephone exchange access 16 and telephone exchange service on the availability and 17 rates for telephone exchange service furnished by rural ex- 18 change carriers. 19 SEC. 102. EXPEDITED REVIEW OF CERTAIN COMPLAINTS 20 Section 208 of the Communications Act of 1934 is 21 amended by adding at the end thereof the following new 22 subsection: 23 "(c) EXPEDITED REVIEW OF CERTAIN COM- 24 PLAINTS-- The Commission shall issue a final order with 25 respect to any complaint arising from alleged violations H.R. 3515 102nd Congress, 1st Session [Page 12 of 35] 1 of section 201A within 270 days after such complaint is 2 filed". 3 SEC. 103. EXPEDITED LICENSING OF NEW TECHNOLOGIES 4 AND SERVICES. 5 Section 7 of the Communications Act of 1934 is 6 amended by adding to the end thereof the following new 7 subsection: 8 "(c) LICENSING OF NEW TECHNOLOGIES-- Within 9 twenty-four months after making a determination under 10 subsection (b) that a technology or service related to the 11 furnishing of tlelcommunications services or information 12 services is in the public interest, the Commission shall 13 adopt and make effective rules for-- 14 "(1) the provision of such technology or service; 15 and 16 "(2) the filing of applications for the authoriza- 17 tions necessary to offer such technology or service to 18 the public, and shall act on any such application 19 within twenty-four months after it is filed. Any ap- 20 plication filed by a carrier under this subsection for 21 the construcction or extension of a line shall also be 22 subject to section 214 and to any necessary approval 23 by the appropriate State commissions". H.R. 3515 102nd Congress, 1st Session [Page 13 of 35] 1 TITLE II -- PROVISIONS AFFECTING 2 DIVESTED OPERATING COMPANIES 3 SEC. 201. PROVISION OF INFORMATION SERVICES 4 Title II of the Telecommunications Act of 1934 is 5 amended by adding at the end thereof the following new 6 section: 7 "SEC. 227. PROVISION OF INFORMATION SERVICES BY DI- 8 OPERATING COMPANIES. 9 "(a) PROVISION OF SERVICES-- A divested operating 10 company or an affiliate thereof may provide information 11 services, subject to this section and title IV. 12 "(b) ELECTRONIC PUBLISHING-- A divested operat- 13 ing company or an affiliate thereof may not offer elec- 14 tronic publishing services in any State in which such com- 15 pany or affiliate provides telephone exchange service until 16 the Commission, after notice and opportunity for public 17 comment and after consultation with the Department of 18 Justice and the appropriate State commissions, deter- 19 mines that-- 20 "(1) at least 50 percent of all businesses and 21 residences within the areas in each State in which 22 such company or any affiliate thereof provides tele- 23 phone exchange service have access to transmission 24 and switching facilities (other than those owned or 25 controlled by a divested operating company or it's af- H.R. 3515 102nd Congress, 1st Session [Page 14 of 35] 1 filiate) that are comparable in quality, cost, geo- 2 graphic range, and functionality to those offered by 3 the divested operating company for the delivery of 4 electronic publishing services; 5 "(2) at least 10 percent of all businesses and 6 residences within the areas in each State in which 7 such company provides telephone exchange service 8 subscribe to services delivered over such alternative 9 facilities; and 10 "(3) the divested operating company or affiliate 11 thereof seeking to provide such electronic publishing 12 services has demonstrated that there is no substan- 13 tial possibility that the divested operating company 14 could use it's position as a local exchange carrier to 15 (A) impede competition in the provision of electronic 16 publishing services, or (B) impose additional costs 17 upon subscribers of telephone exchange service. 18 "(c) WAIVER-- A divested operating company or an 19 affiliate thereof may petition the Commission for a waiver 20 of subsections (b) and (h) to provide a particular elec- 21 tronic publishing service. Such petition shall be granted 22 if such company or affiliate can demonstrate to the Com- 23 mission by clear and convincing evidence that (A) such 24 service would not exist unless offered by such company 25 or affiliate, and (B) the provision of such service by such H.R. 3515 102nd Congress, 1st Session [Page 15 of 35] 1 company or affiliate would not impose additional costs 2 upon subscribers of telephone exchange service. The Com- 3 mission shall provide notice and opportunity for public 4 comment with respect to any request for a waiver persu- 5 ant to this subsection. The provision of any service author- 6 ized pursuant to this subsection shall be subject to all of 7 the other provisions of this Act, including title IV and the 8 requirements of this subsection. 9 "(d) SEPARATE SUBSIDIARY-- 10 "(1) GENERALLY-- Except as provided in sub- 11 section (e), a divested operating company or affiliate 12 thereof may provide information services only 13 through a subsidiary that is separated from the tele- 14 phone exchange service operations of the divested 15 company, in accordance with the requirements of 16 this subsection and the regualations prescribed by the 17 Commission to carry out this subsection. 18 "(2) MINIMUM NUMBER OF OUTSIDE DIREC- 19 TORS-- Any subsidiary required by this subsection 20 shall have a board of directors not less than 33 per- 21 cent of whom are not employees, officers, or direc- 22 tors of any divested operating company or any affili- 23 ate of such company. 24 "(3) TRANSACTION REQUIREMENTS-- Any 25 transaction between any divested operating company H.R. 3515 102nd Congress, 1st Session [Page 16 of 35] 1 and any other affiliate of such company (including 2 the subsidiary required by this subsection)-- 3 "(A) shall not be based upon any pref- 4 erence or discrimination arising out of affili- 5 ation; 6 "(B) shall be carried out in the same man- 7 ner as such company or affiliate conducts such 8 business with unaffiliated persons; 9 "(C) shall be pursuant to contract or tariff 10 reported to the Commission and made available 11 for public inspection; 12 "(D) shall be fully auditable and reflect all 13 costs associated with the conduct of such busi- 14 ness; and 15 "(E) shall not have the effect of permitting 16 any violation of the requirements of subsection 17 (f) of this section. 18 "(4) SEPERATE OPERATION AND PROPERTY-- 19 A subsidiary required by this subsection may not-- 20 "(A) enter into any joint venture or part- 21 nership with the divested operating company; 22 "(B) have employees or a financial struc- 23 ture (other than as provided in this section) in 24 common with the divested operating company; H.R. 3515 102nd Congress, 1st Session [Page 17 of 35] 1 "(C) own any property in common with a 2 divested operating company; or 3 "(D) establish any other subsidiary or af- 4 filiate except after notice to the Commission in 5 such form and containing such information as 6 the Commission may require. 7 "(5) SEPARATE COMMERCIAL ACTIVITIES-- A 8 subsidiary required by this subsection shall carry out 9 directly it's own marketing, sales, accounting, hiring 10 and training of personnel, purchasing, and mainte- 11 nance. 12 "(6) BOOKS, RECORDS, AND REPORTS-- Any 13 subsidiary required by this subsection shall-- 14 "(A) maintain books, records, and ac- 15 counts in a manner prescribed by the Commis- 16 sion which shall be seperate from the books, 17 records, and accounts maintained by the di- 18 vested operating company and the other affili- 19 ates of the divested operating company, and 20 which shall identify any conduct of business 21 with such company and any such affiliates; and 22 "(B) prepare it's own financial statements 23 (including balance sheets and the related state- 24 ments of operations, stockholders' equity, and 25 cash flows) that are not consolidated with the H.R. 3515 102nd Congress, 1st Session [Page 18 of 35] 1 financial statements of the divested operating 2 company and any other affiliate of such com- 3 pany; and 4 "(C) prepare and file with the Commission, 5 whether or not such subsidiary is publicly trad- 6 ed, the annual and periodic reports required of 7 publicly traded companies by the Securities and 8 Exchange Commission. 9 "(7) ADVERTISING-- A subsidiary required by 10 this subsection may not carry out advertising with 11 the divested operating company, except that such 12 subsidiary may carry out institutional advertising 13 with such company if (A) such advertising does not 14 specifically relate to any service, and (B) the sub- 15 sidiary and the divested operating comapany share 16 any costs of such advertising in proportion to their 17 revenue. 18 "(8) SECURITIES INFORMATION-- A subsidiary 19 required by this subsection shall submit to the Com- 20 mission a copy of any statement or prospectus that 21 such subsidiary is required to file with the Securities 22 and Exchange Commission. 23 "(9) OUTSIDE OWNERSHIP-- A divested operat- 24 ing company or an affiliate thereof may not own 25 more than 90 percent of any class of outstanding H.R. 3515 102nd Congress, 1st Session [Page 19 of 35] 1 capital stock of any affiliated subsidiary required by 2 this subsection. 3 "(10) TRANSMISSION CAPACITY-- A seperate 4 subsidiary required by this subsection may not own 5 any transmission facilities, and may obtain the use 6 of such facilities from an affiliated divested operat- 7 ing company or affiliate thereof only pursuant to 8 tariffs of general applicability. 9 "(11) PRESERVATION OF SEPERATE SUBSIDI- 10 ARY REQUIREMENTS FOR GRANDFATHERED FUNC- 11 TIONS-- Nothing in this subsection shall be con- 12 strued to relieve a divested operating company or 13 any affiliate thereof (or any other local exchange 14 carrier or affiliate thereof) of any seperate subsidi- 15 ary requirement imposed before October 1, 1991. 16 "(12) PROVISION OF SERVICES AND INFORMA- 17 TION-- A divested operating company may not pro- 18 vide any services or information to a subsidiary re- 19 quired by this subsection unless such services or in- 20 formation are made available to others on the same 21 terms and conditions. 22 "(e) EXCEPTION TO SEPERATE SUBSIDIARY RE- 23 QUIREMENT-- A divested operating company or affiliate 24 thereof shall not be required to establish a subsidiary pur- 25 suant to subsection (d) with respect to any information H.R. 3515 102nd Congress, 1st Session [Page 20 of 35] 1 service provided by such company or affiliate on or before 2 October 1, 1991. 3 "(f) PREVENTION OF CROSS-SUBSIDIARIES-- 4 "(1) COST ALLOCATION SYSTEM REQUIRED-- 5 Any divested operating company that provides infor- 6 mation services, or which has an affiliate that is en- 7 gaged in the provision of such services, shall estab- 8 lish and administer, in accordance with the require- 9 ments of this subsection and the regulations pre- 10 scribed thereunder, a cost allocation system that, to- 11 gether with the subsidiary requirements of sub- 12 section (d), is intended to prohibit any cost of pro- 13 viding such services from being subsidized by reve- 14 nue from telephone exchange service or telephone ex- 15 change access services. 16 "(2) COST ASSIGNMENT AND ALLOCATION REG- 17 ULATIONS-- 18 "(A) GENERALLY-- The Commission shall 19 establish regulations to require the just and 20 reasonable assignment and allocation of all 21 costs that are in any way incurred by a divested 22 operating company or any affiliate thereof in 23 the provision of any information service. 24 "(B) JOINT AND COMMON COSTS-- The 25 regulations adopted pursuant to this paragraph H.R. 3515 102nd Congress, 1st Session [Page 21 of 35] 1 shall include a requirement that any costs of 2 any investment or other expenditure that can- 3 not be allocated based upon direct or indirect 4 measures of cost causation shall be allocated to 5 unregulated services-- 6 "(i) under a formula that ensures that 7 the rates for telephone exchange service 8 are no greater than they would have been 9 in the absence of such investment (taking 10 into account any decline in the real costs 11 of providing such service), or 12 "(ii) based upon the highest forecast 13 unregulated usage of the investment over 14 the life of the investment, 15 whichever method results in the lesser allocation 16 of such costs to telephone exchange service. 17 "(3) INSULATION OF RATEPAYERS-- 18 "(A) ASSETS-- The Commission shall, by 19 regulation, ensure that the economic risks asso- 20 ciated with the provision of information services 21 by divested operating companies or affiliates 22 thereof (including any increases in the divested 23 operating company's cost of capital that occur 24 as a result of the provision of such services) are 25 not borne by customers of telephone exchange H.R. 3515 102nd Congress, 1st Session [Page 22 of 35] 1 service in the event of a business loss or failure. 2 Investments or other expenditures assigned to 3 information services shall not be reassigned to 4 telephone exchange service or telephone ex- 5 change access service. 6 "(B) DEBT-- Any divested operating com- 7 pany affiliate-- 8 "(i) which is providing information 9 services, and 10 "(ii) which is required to be or is 11 structurally seperate from an affiliate en- 12 gaged in the provision of telephone ex- 13 change service, 14 shall not obtain credit under any arrangement 15 that (I) would permit a creditor, upon default, 16 to have recourse to the assets of the divested 17 operating company, or (II) would induce a cred- 18 itor to rely on the tangible or intangible assets 19 of the divested operating company in extending 20 credit. 21 "(4) TRANSFERS OF ASSETS BETWEEN AFFILI- 22 ATED COMPANIES-- The Commission shall prescribe 23 regulations governing the accounting for the transfer 24 of assets between a divested operating company and 25 it's affiliates. Such regulations shall protect the inter- H.R. 3515 102nd Congress, 1st Session [Page 23 of 35] 1 ests of ratepayers of telephone exchange service and 2 require such transfer to be conducted by means of 3 a transaction that complies with subsection (d)(3). 4 Such regulations shall require that-- 5 "(A) any transfer of assets from such an 6 affiliate to it's affiliated divested operating com- 7 pany be valued at the lesser of net book cost or 8 fair market value; and 9 "(B) any transfer of assets fromm a divested 10 operating company to it's affiliate be valued at 11 the greater of net book cost or fair market 12 value. 13 "(5) ANNUAL AUTIDING REQUIREMENT-- 14 "(A) AUDIT APPLICABILITY AND PUR- 15 POSE-- Each divested operating company that 16 engages in, or has an affiliate that engages in, 17 or has a financial or management interest in an 18 orginization or entity that provides information 19 services, shall provide annually to the Commis- 20 sion, and to the State Commission of each State 21 within which such company provides telephone 22 exchange service, a report on the results of an 23 audit by an independant auditor conducted for 24 the purpose of determining wether the com- 25 pany has-- H.R. 3515 102nd Congress, 1st Session [Page 24 of 35] 1 "(i) established and administered a 2 cost allocation system as required by para- 3 graph (1) of this subsection, and 4 "(ii) complied with the cost assign- 5 ment and allocation regulations prescribed 6 under this subsection. 7 "(B) CONDUIT OF AUDIT-- Such audit 8 shall be conducted, at divested operating com- 9 pany expense, in accordance with audit proce- 10 dures prescribed by the Commission, by regula- 11 tion, which shall include approval of auditor se- 12 lection by the Commission and rotation of audi- 13 tors or other procedures to ensure the inde- 14 pendence of such auditor. 15 "(C) SUBMISSION OF AUDIT RESULTS; 16 CERTIFICATION-- The divested operating com- 17 pany shall submit the audit to the Commission, 18 which shall make the audit report available for 19 public inspection. Such report shall be certified 20 by the person conducting the audit and by an 21 appropriate officer of such affiliate and shall 22 identify with particularity any qualifications or 23 limitations on such certification and any other 24 information relevant to the enforcement of the 25 requirements of this section. H.R. 3515 102nd Congress, 1st Session [Page 25 of 35] 1 "(D) ACCESS TO DOCUMENTS-- For pur- 2 poses of conducting and reviewing such audit-- 3 "(i) the auditor, the Commission, and 4 a State commission with jurisdiction over 5 the divested operating company shall have 6 access to the accounts and records of the 7 divested operating company and to those 8 accounts and records of any of it's affiliates 9 necessary to verify transactions conducted 10 with the divested operating company; and 11 "(ii) the Commission and a State 12 commission shall have access to the work- 13 ing papers and supporting materials of any 14 auditor who performs an audit under this 15 paragraph. 16 "(g) RECOVERY OF USE OF INTANGIBLE ASSETS-- 17 The Commission and a State commission shall, within 18 their respective jurisdictions, require a divested operating 19 company to assess any affiliate providing information 20 services a charge for the reasonable vvalue of any intangible 21 assets used in the provision of information services, and 22 to credit the amount of such charge to the provision of 23 telephone exchange service. 24 "(h) REMOVAL OF BARRIERS TO COMPETITIVE 25 ENTRY-- A divested operating company or affiliate there- H.R. 3515 102nd Congress, 1st Session [Page 26 of 35] 1 of may not provide electronic publishing services, other 2 than those it provided on or before October 1, 1991, in 3 any State in which such company or affiliate provides tele- 4 phone exchange service, unless and untill all entry barriers 5 to the competitive provision of telecommunications services 6 imposed by each State or State commission in which such 7 company or affiliate provides telephone exchange service 8 have been removed with respect to such company or affili- 9 ate. 10 "(i) PROVISION OF GATEWAY SERVICES-- Any di- 11 vested operating company or affiliate thereof that offers 12 a gateway service shall make such service available concurr- 13 ently to all it's subscribers at the same rates, terms, 14 and conditions. 15 "(j) ENFORCEMENT-- A person who is injured by a 16 violation of any of the requirements of this section may, 17 in lieu of filing a complaint under section 208, commence 18 in a civil action for injunctive relief and monetary damages 19 in any Federal judicial district in which the defendant re- 20 sides or has an agent. A residential customer of telephone 21 exchange service shall have standing to commence an ac- 22 tion under this section, without regard to the amount in 23 controversy. In any action brought under this section, the 24 court may award the costs of litigation (including reson- 25 able attorneys fees). H.R. 3515 102nd Congress, 1st Session [Page 27 of 35] 1 "(k) ADDITIONAL AUTHORITY-- In addition to any 2 other authority which the Commission may exercise under 3 this Act, the Commission shall take such actions as are 4 necessary-- 5 "(1) to prevent anticompetitive practicces be- 6 tween a divested operating company and any affili- 7 ate of the divested operating company; 8 "(2) to protect ratepayers of divested operating 9 companies from subsidizing the provision of informa- 10 tion services by such companies or their affiliates; 11 "(3) to prevent any divested operating company 12 or any affiliate thereof fromm imposing any unjust or 13 unreasonable rates or charges for any common car- 14 ier services that are provided in connection with the 15 provision of information services. 16 "(m) DEFINITIONS-- As used in this section-- 17 "(1) AFFILIATE-- The term 'affiliate' means 18 any organization or entity that, directly or indirectly, 19 owns or controls, or is owned or controlled by, or is 20 under common ownership or control with, a divested 21 operating company. For purposes of this paragraph, 22 the terms 'own', 'owned', and 'ownership' means a di- 23 rect or indirect equity interest (or equivalent there- 24 of) of more than 10 percent of an organization or 25 entity, or the right to more than 10 percent of the H.R. 3515 102nd Congress, 1st Session [Page 28 of 35] 1 gross revenues of an organization or entity under a 2 revenue sharing or royalty agreement. 3 "(3) DIVESTED OPERATING COMPANY-- The 4 term 'divested operating company'-- 5 "(A) means any of the following compa- 6 nies: Bell Telephone Company of Nevada, Illi- 7 nois Bell Telephone Company, Indiana Bell 8 Telephone Company, Incorporated, Michigan 9 Bell Telephone Company, New England Tele- 10 phone and Telegraph Company, New Jersey 11 Bell Telephone Company, New York Telephone 12 Company, US West Communications Company, 13 South Central Bell Telephone Company, South- 14 ern Bell Telephone and Telegraph Company, 15 Southwestern Bell Telephone Company, the 16 Bell Telephone Company of Pennsylvania, the 17 Chesapeake and Potomac Telephone Company, 18 the Chesapeake and Potomac Telephone Com- 19 pany of Maryland, the Chesapeake and Poto- 20 mac Telephone Company of Virginia, the 21 Chesapeake and Potomac Telephone Company 22 of West Virginia, the Diamond State Telephone 23 Company, the Ohio Bell Telephone Company, 24 the Pacific Telephone and Telegraph Company, 25 and Wisconsin Telephone Company; and H.R. 3515 102nd Congress, 1st Session [Page 29 of 35] 1 "(B) includes any successor or assign of 2 any such company, but does not include any af- 3 filiate of such company. 4 "(3) GATEWAY SERVICE-- The term 'gateway 5 service' means an information service that, at the re- 6 quest of the provider of an electronic publishing 7 service or other information service, provides a sub- 8 scriber with access to such electronic publishing 9 service or other information service, utilizing the fol- 10 lowing functions: data transmission, address trans- 11 lation, billing information, protocol conversion, and 12 introductory information content." 13 SEC. 202. AUTHORIZATION OF APPROPRIATIONS. 14 "(a) AMENDMENT-- Section 6 of the Communica- 15 tions Act of 1934 is amended by adding at the end thereof 16 the following new subsection: 17 "(d) SEPERATE SUBSIDIARY REQUIREMENTS-- Such 18 sums as may be necessary are authorized to be appro- 19 priated for the implementation and enforcement of the re- 20 quirements of section 208(c) and 227 of this Act. Such 21 funds shall be in addition to any appropriations authorized 22 under subsection (a)." 23 "(b) PROVISION OF INFORMATION SERVICES-- A di- 24 vested operating company or an affiliate thereof may not 25 provide information services until enactment of the H.R. 3515 102nd Congress, 1st Session [Page 30 of 35] 1 initial appropriation of funds authorized under section 2 6(d) of the Communications Act of 1934, as added by sec- 3 tion 202(a) of this Act. 4 TITLE III -- MISCELLANEOUS PROVISIONS 5 SEC. 301. DEFINITIONS 6 Section 3 of the Communicatins Act of 1934 is 7 amended by adding at the end thereof the following new 8 subsections: 9 "(hh) 'Electronic publishing service' means the provi- 10 sion of any information-- 11 "(1)(A) that the provider or publisher has (or 12 has caused to be) authored, originated, gathered, 13 collected, produced, compiled, edited, categorized, or 14 indexed; or 15 "(B) in which the provider or publisher has a 16 direct or indirect financial or proprietary interest; 17 and 18 "(2) which is disseminated to an unaffiliated 19 person through some electronic means. 20 "(ii) 'Information services' means the offering of a 21 capability for generating, acquiring, storing, transforming, 22 processing, retrieving, utilizing, or making available infor- 23 mation that may be conveyed via telecommunications, and 24 includes electronic publishing, but does not include any 25 use of any such capability for the management, control, H.R. 3515 102nd Congress, 1st Session [Page 31 of 35] 1 or operation of a telecommunications service or the man- 2 agement of a telecommunications service. 3 "(jj) 'Local exchange carrier' means a provider of 4 telephone exchange service that is classified by the Com- 5 mission as a dominant carrier. 6 "(kk) 'Rural exchange carrier' means menas a local ex- 7 change carrier serving a total of 50,000 or fewer access 8 lines. 9 "(ll) 'Telecommunications' means the transmission, 10 between or among points specified by the customer, of in- 11 formation of the customer's choosing, without change in 12 the form or content of the information as sent and re- 13 ceived, by means of an electromagnetic transmission me- 14 dium, including all instrumentalities, facilities, apparatus, 15 and services (including the collection, storage, forwarding, 16 switching, and delivery of such information) essential to 17 such transmission. 18 "(mm) 'Telecommunications service' means the pub- 19 lic or private offering for hire of telecommunications facili- 20 ties." 22 SEC. 302. JURISDICTION 23 Section 2 of the Communications Act of 1934 is 24 amended-- H.R. 3515 102nd Congress, 1st Session [Page 32 of 35] 1 (1) in subsection (b), by striking out "223 or 2 224" and inserting "223, 224, 225, and 227"; and 3 (2) by adding at the end the thereof the following 4 new subsection: 5 "(c)(1) Notwithstanding subsection (b), a State may 6 not regulate the rates, terms, or conditions for the offering 7 of information service, except as provided in this sub- 8 section and title IV. 9 "(2) A State may impose regulations upon a local ex- 10 change carrier with respect to the intrastate provision of 11 information services by such carrier or an affiliate thereof 12 if-- 13 "(A) such regulations are necessary and appro- 14 priate to seperate the provision of such services from 15 the provision of telephone exchange services by such 16 carrier or affiliate; 17 "(B) such regulations are intended to protect 18 the privacy rights of customers of telephone ex- 19 change services; 20 "(C) such regulations do not affect the rates, 21 terms, or conditions for the provision of such infor- 22 mations services or the types of such services offered 23 by such carrier or affiliate; and 24 "(D) such regulations are not inconsistent with 25 the purposes of this Act or impede signifigantly the H.R. 3515 102nd Congress, 1st Session [Page 33 of 35] 1 enforcement of this Act or any regulation or order 2 prescribed by the Commission pursuant to the 3 Act." 4 SEC. 303. TELEPHONE EXCHANGE SERVICE IN RURAL 5 AREAS 6 Nothing in the amendments made by this Act shall 7 be construed to limit the authority of the States to take 8 actions, consistant with the findings and purposes of that 9 Act, to ensure thae availability of telephone exchange serv- 10 ice at resonable rates in areas served by rural exchange 11 carriers (as such term is defined in section 3(kk) of the 12 Communications Act of 1934). 13 SEC. 304. APPLICABILITY OF OTHER PROVISIONS OF COM- 14 MUNICATIONS ACT 15 Nothing in the amendments made by this Act shall 16 be construed to relieve a divested operating company or 17 affiliate thereof (as such terms are defined in section 18 227(m) of the Communications Act of 1934) of any of 19 the obligations, limitations, or responsibilities imposed by 20 any other provision of the Communications Act of 1934, 21 as amended. 22 SEC. 305. APPLICABILITY OF ANTITRUST LAWS 23 (a) APPLICABILITY OF THE MODIFICATION OF FINAL 24 JUDGEMENT-- A divested operating company shall remain 25 fully suubject to the Modification of Final Judgement in all H.R. 3515 102nd Congress, 1st Session [Page 34 of 35] 1 respects except as expressly provided in the amendments 2 made by this Act. 3 (b) NO ANTITRUST IMMUNITY-- Nothing in the 4 amendments made by this Act shall be construed to create 5 any immunity to any civil or criminal action under any 6 Federal or State antitrust law, or to alter or restrict in 7 any manner the applicability of any Federal or State anti- 8 trust law to the actions of a divested operating company 9 or affiliate thereof (as such terms are defined in section 10 227(m) of the Communications Act of 1934). 11 (c) DEFINITIONS-- For purposes of this section-- 12 (1) FEDERAL ANTITRUST LAWS-- The term 13 'Federal antitrust laws' means -- 14 (A) the acts as cited in section 1 of the Clay- 15 ton Act (15 USC 12), 16 (B) section 5 of the Federal Trade Com- 17 mission Act (15 USC 45); and 18 (C) any law enacted after the datr of en- 19 actment of this Act by the Congress which pro- 20 hibits, or makes available to the United States 21 or to any person in any court of the United 22 States any civil remedy with respect to, any re- 23 restraint upon, or monopolization of, interstate or 24 foreign trade or commerce. H.R. 3515 102nd Congress, 1st Session [Page 35 of 35] 1 (2) MODIFICATION OF FINAL JUDGMENT -- The 2 term 'Modification of final judgment' means the 3 order entered August 24, 1982, in United States -vs- 4 Western Electric Co., Civil Action No. 82-0192 5 (United States District Court, District of Columbia) [END] ---------------------- The full text of this can be obtained from eff.org via anonymous ftp as file HR3515.Z dyett@phad.hsc.usc.edu Just my opinions!